Benn Steil


A graphical take on geoeconomic issues, with links to the news and expert commentary.

Print Print Cite Cite
Style: MLA APA Chicago Close


Can the U.S. Cut Defense Spending?

February 18, 2011

“There’s only one way to [fix America’s long-term budget problems],” said President Obama’s fiscal commission co-chair Alan Simpson. “You dig into the big four, Medicare, Medicaid, Social Security, and defense.” In shying clear of Medicare, Medicaid, and Social Security in his 2012 budget proposal, the president took a bow to the formidable political challenge posed by the first three. But what about defense, which accounts for a whopping 22% of Federal expenditures? In spite of the ups and downs in the global peace index, history suggests that cuts in nominal defense spending are just as hard to achieve. As the yellow line in the top figure shows, nominal defense spending almost never falls. Declines in defense spending as a percentage of GDP have historically been accounted for by inflation or real GDP growth – not by spending cuts. The fiscal commission’s report called for $34 billion in nominal defense cuts between 2012 and 2013, a time-period during which the president’s budget calls for increases. But even the president’s much more modest brand of fiscal discipline looks oversold. His budget projects strong economic growth in the medium term, but if private growth forecasts are more accurate he will need to do the politically impossible – actually cut nominal spending – in order to achieve the real cuts implied by his budget.

Economist: Threatening a Sacred Cow
OMB: The 2012 Budget
Fiscal Commission: The Moment of Truth
Boot: A Farewell to Arms

Post a Comment 5 Comments

  • Posted by RousseauC

    Is it a country for the people? When people are losing their jobs and homes, the military is squandering… The simple reason is that no one in the Congress has the guts to take on the military spending… It is shameful…

  • Posted by John

    Can defense budget be cut? The answer is absolutly YES! I speak as a commissioned officer in the military with over 16 years of service. I see so much waste and inefficiency in the way we operate, it amazes me that we are able to succeed in any of the missions! Many projects/equipments start and end with little improvement in our capability. What I am about to say is not politically possible but here it goes anyway.

    I advocate for a reduced spending not for fiscal reasons for but for mission effectivenss! We’ve become too much like other bureacuratic government agencies. We are top heavy and spread too thin. Too many command/agencies are out there duplicating same mission sets. If we want to maintain our military might we need to become lean, focused and efficient. We can do this by designing our military from scratch. Imagine you are a newly formed nation and were given a check to design a military using all available sources. Don’t assume you need 4 separate branches of the military? This organization is based on WWII requirements when the missions sets were clearly divided between the services. This is no longer the case. A good example is Navy’s ability to conduct missions at sea, land and air. Forget all current projects and acquisions. Give us a realistic budget to work with, ($300 Billion is a good start) and identify the core missions that are vital to national interest. Based on those missions, come up with a requirement list for personnel and equipments without knowing anything about the ongoing projects, procurement, etc. Once you’ve identified the fat, cut it. Period. No if and buts about it.

  • Posted by Loha Singh

    U.S. defence budget should be zero based – assess what is needed and then budget for it for a country which has flirted with business bancruptcy.

    The U.S. defence budget is also a very large subsidy which distorts the global economy. Troops in Saudi Arabia are a subsidiy to the oil economy which in turn prevents innovation such as electric automobiles.

    Any way you look at it, the defence budget is out of control.

  • Posted by robert

    I personally think that defense budget can be cut but that this will necessarily take many years to occur. First of all, there are maintaining cost that are probably already very high, keeping all the armament, the navy, machinery etc, you can’t just do away with it without utilizing its full useful life. Secondly, if oil costs keep increasing it will be even more difficult to cut defense spending. Third, the USA has long-term political commitments to maintain operations all over the world. This includes military bases in over 100 countries, if you go to Germany for example there is a huge base there. In many local conflicts the USA is the international power overseeing what happens. Add the Afghanistan and Iraq wars, the necessity to be on the watch in the middle east for problems that may arise in the israeli-palestine conflict. Moreover, Taiwan and South Korea and now also India expect the USA to be somewhat available as a security ally. At home, you have the military industrial complex that is obviously quite powerful and big. Obama was seen as the coming of peacetime, however, US special forces now operate in 15 more countries than with the Bush administration and American involvement like in Lybia seems necessary. Overall, it could happen but I think it may happen over the course of one or two decades, provided it will still be the biggest in the world and the foreign policy changes.

  • Posted by marg

    Why can the DOD start by looking at the 700+ overseas facilities and examine which ones are redundant because new sites accomplish the same purpose; which ones have accomplished their original purpose and are no longer needed; which ones are implementing outdated policies of the U S; and which ones could be paid for by the host country. Tjhis could be a start to reduction but I think the ideas presented by John’s comments are the best way t go.

Post a Comment

CFR seeks to foster civil and informed discussion of foreign policy issues. Opinions expressed on CFR blogs are solely those of the author or commenter, not of CFR, which takes no institutional positions. All comments must abide by CFR's guidelines and will be moderated prior to posting.

* Required